Barbara Yaffe: Even condos becoming out of reach in Vancouver’s sky-high housing market

Barbara Yaffe, Vancouver Sun11.04.2014

A water taxi decorated with a Canadian flag on the roof travels on False Creek as boats are moored in a marina near Yaletown condo towers in Vancouver, B.C., on Sunday July 13, 2014. According to Environment Canada Sunday was set to be the peak of temperatures during a current hot spell. Highs of 27 degrees were forecast for Vancouver with 32 degrees expected inland.

“That’s the reality of the Vancouver housing market and nothing much will change that in the foreseeable future,” says the owner of Strategics, a 33-year-old Vancouver company analyzing market risk for condo developers and investors.

Schliewinsky says, increasingly, even multi-unit dwellings are becoming unaffordable for most buyers.

According to Schliewinsky’s Condo Report last spring, buying a 1,087-square-foot, two-bedroom unit in a new highrise on Vancouver’s east side cost, on average, $705,456 — plus HST; on the west side, $768,483 for 942 square feet.

Lately, in sharp contrast to soaring prices for detached homes, prices for standard condo units in Greater Vancouver in fact have moderated, according to RBC Economics Research.

Still, by the bank’s reckoning, it requires nearly 40 per cent of median pre-tax “household” income to buy a Vancouver-area condo, which includes mortgage payments, property taxes and utilities.

By contrast, in Canada’s largest city, Toronto, it takes 34.2 per cent of household income to purchase a standard condo. In Calgary, arguably Canada’s most economically robust city, 20.4 per cent of income.

Clearly, even condos — representing 33.5 per cent of Vancouver’s existing housing stock — aren’t a comprehensive answer to affordability in this city.

While prices may have moderated during the last three calendar quarters, the Greater Vancouver Real Estate Board notes the cost of a typical east-side condo has increased over the past five years by 21 per cent, about the same as on the city’s west side (Detached homes went up 50 to 60 per cent).

During that period, condo prices in the wider region increased by only 15 per cent.

Those wishing to live right in the city are showing determination in making their condo purchases — 1,172 units sold in April, representing an 11.4-per-cent increase over one year earlier.

Some team up to buy, or convince parents or relatives to help with a down payment.

And of course, older downsizers, with cash from a home sale, are able to afford the high condo prices.

The Greater Vancouver Real Estate Board reports the typical price buyers paid in April for a west side condo was just less than $500,000; $319,000 on the east side; $590,000 in West Vancouver. (The board’s numbers don’t differentiate between new or old units, concrete or wood-frame).

An Affordability Index for spring of 2014, sponsored by Urban Development Institute and Fortis BC, reveals fewer than a third of buyers in Vancouver in fact can afford to purchase a new concrete or wood-frame condominium at current prices.

And just 34.7 per cent can afford units in older concrete condominium buildings, while 41.4 per cent can afford to buy in older wood-frame structures.

Developers recognize, with detached housing in Vancouver growing so unaffordable, increasingly, families will look to condo housing. To respond, they’re building more three-bedroom units, which could carry heavier price tags.

Whatever happens on the pricing side, condos are bound to continue to play a role in housing Vancouver’s fast-growing population.

And developers know it. In 2012, 64 per cent of all housing starts in Vancouver were condominium developments, the highest such ratio in Canada.

Condos may be getting outrageously expensive. But hey, everything is relative.

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Barbara Yaffe: Even condos becoming out of reach in Vancouver’s sky-high housing market

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